Table of Contents

Steering Committee Meeting Subject and Schedule for the Next Annual Meeting Election of a New Treasurer Membership Policy Noyes Proposals Giving the Resthouse a Negakilowatt

Making Economics a Tool for Sustainability -- by Dana Meadows

Rough Notes on a New Economics -- by John Peet

Announcements Upcoming Conferences on Gaming and System Dynamics You Too Can Be in the Los Angeles Times Sabbaticals in New Hampshire

News From the Members

Stories, Quotes, Jokes Egypt Prepares for Greenhouse Floods Some Views on Wilderness A Limerick for the Ozone Layer The Market Can Save the Elephant

Steering Committee Meeting

The Balaton Group Steering Committee met December 2-3, 1989, at Joan Davis's house in Zurich, Switzerland, to plan the next annual meeting and discuss other business of the network. Present were Hartmut Bossel, Joan Davis, Bert De Vries, Dennis Meadows, Dana Meadows, Niels Meyer, and Chirapol Sintunawa.

Here is a summary of our discussions. If you have comments or suggestions, please communicate them to one of the Steering Committee members.

Subject and Schedule for the Next Annual Meeting The meeting will be held from August 30 to September 4, 1990. The bus to Csopak will leave Budapest the afternoon of August 30; the introductory session will be that evening. The bus will return to Budapest after lunch on September 4.

As customary, the mornings will be devoted to plenary sessions, afternoons to whatever working groups members form, evenings to informal presentations, slide shows, game demonstrations, computer demonstrations, videotapes, singing, saunas, etc.

1 The Steering Committe discussed the "embarrassment of riches" many people felt at the last meeting. In the unstructured afternoons and evenings there was too much to do -- too many interesting people to talk to, videotapes to watch, presentations to attend. In a sense this is "good trouble" and the Steering Committee is glad the meeting was so full of worthwhile offerings. But we did ask ourselves if there is any way we can structure these periods more helpfully, to be sure people can allocate their time in an informed and satisfying way.

One suggestion was that we make and post a fixed schedule by which each videotape will be shown only once, instead of the come- and-play-what-you-want policy we've had so far. Another was to limit each evening presentation to only 20-30 slides.

Any other ideas? We could use some guidance from the members on this one.

The topic of the plenary sessions next year will be, by popular demand, "Making Economics a Tool for a Sustainable Society." Bert De Vries will be in charge of organizing this part of the meeting, with help from other members of the Steering Committee. At a time when our East European members have the necessity and challenge of re-thinking their economic systems -- and when the rest of us should be rethinking ours as well -- it seems appropriate for the Balaton Group to take on as a formal topic of discussion one that has always lurked underneath all our discussions. Why is it that our traditional economic paradigms, accounting methods, indicators, information signals lead society to exploit unjustly and unsustainably both natural resources and human beings? Is it possible to re-think economics, to structure a new economic paradigm, preserving the best of the old and adding whatever is needed to ensure the long-term welfare of people and of nature?

We explore this topic further later in this Bulletin.

The tentative schedule for the plenary sessions is listed below. At this time all speakers are not confirmed.

Friday, August 31. Introducing Sustainable Economics. What are the failures of the old economics, both market and planned? From what we know about systems, what should be the major design features of an economics of justice and sustainability? First there will be a discussion of the role of information as conveyed by indicators in policy making, then some theoretical approaches for correcting and/or complementing economic indicators. possible speakers -- Herman Daly (World Bank), John Sterman (MIT System Dynamics Group), Roefie Hueting (CBS, The Hague), also

2 possible A. Aganbegyan, R. Repetto, D. Blades, H. Peskin, M. Slesser, J. Peet, B. De Vries..

Saturday, September 1. New Accounting, New Indicators. What is actually going on at the U.N., at the World Bank, in various countries to restructure national accounts, to recalculate GNP, to give societies better signals about their own performance? During this day "state of the environment" reports will be summarized for several countries, and possibly for several corporations. The emphasis will be on those quantifiable data that can be made available, and the underlying criteria and aggregation problems. possible speakers -- Lucia Severinghaus (Academica Sinica, Taipei), Miklos Persanyi (Ministry of Environment, Budapest), Hans Opschoor (Free University of Amsterdam ), Wim Hafkamp (TRN, The Hague)

Sunday, September 2. New Economic Policies. From debt-for-nature swaps to ecotaxes, what new ways are being discussed and implemented by which governments may use economic policy (prices, taxes, debt financing, and other instruments) to produce a more sustainable use of resources and the environment? Some cases will be presented and discussed to illustrate how information on the state of the environment can be used to change behavior. possible speakers -- Niels Meyer (on Ecotax Scandinavia), Alvaro Umane (on debt-for-nature swaps), Udo Ernst Simones (FRG), Calestous Juma (Kenya), Hartmut Bossel.

Monday, September 3. An Economics not of Quantity but Quality. What of the underlying paradigm that has led to our current economic system? Can we just "fix up" the system without threatening the deepest assumptions and values of the industrial revolution? How do you found a modern economy on concepts of quality and community ethics, instead of the concepts of quantity and individual wants? What values are threatened if decision- making is confined to market-place negotiations based on quantifiable indicators? What help can there be from gaming or other social devices to explore both quantitative and qualitative values? possible speakers -- Herman Daly (World Bank), Ashok Khosla or Aromar Revi (Development Alternatives, New Delhi), Dennis Meadows and Bert De Vries (on gaming, especially the heat-trap game), Willis Harman, Dana Meadows.

Election of a New Treasurer For reasons that have to do with the Byzantine operations of the United States Internal Revenue Service, Betty Miller is no longer able to serve as the official treasurer of the INRIC and has resigned from that post. She will continue to act as our

3 bookkeeper and organizer, performing all the essential services she has always carried out to hold us together and keep us legal.

The Steering Committee elected Dana Meadows to replace Betty as INRIC treasurer.

Membership Policy The large attendance at the last annual meeting brought up a question that the Balaton Group/INRIC has discussed many times, but has never had to resolve until now -- the question of our own limits. We have hit some limits now, in both our ability to support the expense of the annual meeting, and in the number of people our traditional meeting place, the oil-and-gas workers' resthouse in Csopak, can accommodate.

Therefore INRIC is faced with a classic dilemma. Should we expand the limits -- find more money, find a larger meeting place? Or live within them?

If we can't work out an answer to this question, how can we expect the world to do so?

Assuming that we decide to live within our current limits, many further questions come up. What, exactly, defines a Balaton Group member? Are members individuals or organizations? Who has a right to receive the Bulletin and attend meetings? We have never charged for either of these privileges -- should we? For whom should the limited financial resources of the Group support travel to the meetings? Who is eligible to receive Noyes exchange grants and other Group resources?

In wrestling with these questions the Steering Committee recognized that in fact we have both individual and organizational members. To maintain both kinds of members, Dennis Meadows put forth the following proposal: (NOTE: This is not an adopted policy The Steering Committee expects that this proposal will be controversial and eagerly solicits comments and alternative suggestions. The matter will be settled finally at the next Annual Meeting.)

INRIC membership means free subscription to the Bulletin, full support for room and board at the annual meeting, travel support if necessary, and eligibility for all other INRIC resources. Interested nonmembers can receive the Bulletin for a subscription fee that covers the real costs of printing and mailing the Bulletin.

Membership should be limited to 21 centers plus 20 individuals who represent only themselves, not their centers. The centers should be geographically distributed: 7 West (including Japan), 7 East, 7 South. When the limit is reached, no new center

4 or individual can be admitted unless an old one drops out. Both centers and individuals shall be evaluated for membership in terms of contribution to sustainable resource use in their own regions, plus contributions to training, research, and effectiveness of other centers and individuals in the network.

Annual meetings will be limited to 60 people, preferably 2 from each center, 2-3 from possible new centers, 10 people attending as individual members, and special speakers invited to contribute their expertise to that particular meeting.

For illustration, based upon past attendance and participation, the following individuals and centers might now be considered members. You can see that the "ideal" balance outlined above has not yet been achieved (if it is indeed ideal). Forgive us if we have inadvertently left anyone out:

Individuals -- Alcamo, Bach, Budowski, Davis, De Vries, Golubev, Gyene, Hrabovszky, Johansson, Kindler, Liverman, Moody, Moxnes, Peceli, Peet, Sagasti, Saraph

Centers -- West: Institute for Environmental Studies, University of Wisconsin, USA, Environmental Studies Program, Dartmouth College, USA, Institute for Policy & Social Science Research University of New Hampshire, USA, Technical University of , Environmental Systems Analysis Group, University of Kassel, FRG, IIASA, Laxenburg, Austria, Center for Energy and Environmental Studies, University of Groningen, , Centre for Human Ecology, Edinburgh University, Scotland, Group for the Analysis of Environmental Systems, New University of Lisbon,

East Institute for Systems Studies, Moscow, USSR, Lithuanian Forest Research Insitute, Kaunas, Lithuania, Karl Marx University, Budapest, Hungary, Institute for Thermal Energy Engineering, Technical University of Budapest, Hungary, Institute for Energetics, Budapest, Hungary

South Faculty of Environment and Resource Studies, Mahidol University, , Institute of Resource Assessment, University of Dar Es Salaam, Tanzania, University of Costa Rica, San Jose, Costa Rica, Institute of Ecology, Padjadjaran University, ,

5 Development Alternatives, New Delhi, , Systems Research Institute, Pune, India, Institute of Environmental Sciences and Management, University of the Philippines, Los Banos, the Philippines, Department of Natural Resources, Cairo University, Egypt.

Noyes Exchange Grants The Jessie Smith Noyes Foundation has generously provided INRIC with a grant to promote exchanges of people among Balaton Group centers, for purposes of training and joint project work. Balaton Group members are eligible to apply for these grants at any time via an informal proposal (sent to Dana Meadows) describing clearly the intended project and presenting a simple budget. Grants will only be awarded for projects involving at least two INRIC centers or members, and first priority will go to South-South exchanges. Each year the grant application process remains open until funds are exhausted. Some funds are still available for this year.

The latest Noyes exchange grants to be awarded are:

1. To Nic. D. Briones, Institute of Environmental Science and Management, University of the Philippines and Chirapol Sintunawa, Faculty of Environment and Resource Studies, Mahidol University, Thailand. $1,980 (to be matched by $1,500 from the two participating universities). For a two-part project: (a.) A seven-day workshop to be held in the Philippines and taught by Chirapol on basic system models for natural resource management. The purpose is to train a core of Filipinos who will take these models into teaching, government, and the field. (b.) A visit by Nic to Mahidol University to study the Ph.D. program in environmental studies there. The University of the Philippines is beginning to develop its first graduate program in this area and is eager to learn from successful models, especially successful models from other parts of Asia.

2. To John Peet, University of Canterbury, Christchurch NZ and Chirapol Sintunawa, Faculty of Environment and Resource Studies, Mahidol University, Thailand. $2500 (matched by $1400 from the participating centers). To send a member of Chirapol's research team on energy use in Thai agriculture for 60 days to New Zealand. The Mahidol team has just assembled field data from 7000 Thai farms, 700 cropping activities, and 251 farm machines. Now comes the problem of analyzing these data. John Peet is an expert in the area of resource accounting, especially the assembly of energy intensity tables. John will provide both software and intensive training in data base management to help the Thai team prepare an energy intensity table for Thailand.

6 3. To Tamas Jascay, Technical University of Budapest and Jorgen Norgard, Technical University of Denmark. $1200 for one visit from Budapest to Copenhagen and one visit the other direction to work on the analysis of Hungarian energy data and the incorporation of Hungary into the Balaton Group's Low Electricity Europe Project.

Giving the Resthouse a Negakilowatt The Steering Committee voted to allocate the funds necessary to buy as a gift to our "home" in Csopak (the oil-and-gas-workers' resthouse where we meet) sufficient energy-efficient compact fluorescent light bulbs to make up a negakilowatt of electricity savings. Bert De Vries will be in charge of the technical aspects of this endeavor, with help from Csaba Csaki and Tamas Jascay in Hungary.

Making Economics a Tool for Sustainability -- by Dana Meadows

Ecologist Paul Ehrlich once expressed surprise to a Japanese newspaperman that the Japanese whaling industry would exterminate the very source of its livelihood. The newspaperman replied, "You are thinking of the whaling industry as an organization that is interested in maintaining whales; actually it is better viewed as a huge quantity of capital attempting to earn the highest possible return. If it can exterminate whales in ten years and make 15 percent profit, but it could only make 10 percent with a sustainable harvest, then it will exterminate them in ten years. After that, the money will be moved to exterminating some other resource."

Economic thinking of that sort is behind the burning of Amazonia, the extermination of the last old-growth forests in the United States, the illicit dumping of toxic wastes, the spillage of oil into the oceans, the abuse of land, water, and biological resources all over the world. Economic reckoning is the primary (some would say the only) reckoning, ethic, or imperative that guides resource use in the industrialized world.

In the current vocabulary of condemnation there are few words as final and conclusive as the word 'uneconomic.' If an activity has been branded as uneconomic, its right to existence is not merely questioned but energetically denied. Anything that is found to be an impediment to economic growth is a shameful thing, and if people cling to it, they are thought of as either saboteurs or fools. Call a thing immoral or ugly, soul-destroying or a degradation of man, a peril to the peace of the world or to the well-being of future generations; as long as you have not shown it to be 'uneconomic' you have not really questioned its right to exist, grow, and prosper.

7 -- E.F. Schumacher in Small is Beautiful: Economics as if People Mattered.

People who are trained as physical or biological scientists tend to focus their attention on a natural resource itself and its rates of exploitation and regeneration. These people can see clearly that the logic of market economics, maximizing return on investment and pursuing eternal economic growth, if followed fully, will lead to accumulations of mountains of money, and eventually no more natural resources to buy -- at which point the money becomes meaningless.

Many (not all) people who are trained in Western market economics cannot see that point at all. Their attention is not on the real physical resource, but on money flows, which only loosely and imperfectly symbolize the relative value and scarcity of the resource -- and only after a time delay. Some of the most important resources, especially the environmental services of waste purification and materials regeneration through the biogeochemical cycles, are not priced at all and thus are literally not visible to those who see the world in money flows.

There is an endless confusion in the economic literature, and in public policy debate, between money and the real things money is supposed to stand for.

The world doesn't run on money. The grass doesn't pay the clouds for the rain. -- Buckminster Fuller

There is a confusion between economic value and other crucially important human values.

The things we cherish, admire, or respect are not always the things we are willing to pay for. Indeed, they may be cheapened by being associated with money. It is fair to say that the worth of the things we love is better measured by our unwillingness to pay for them.... The things we are unwilling to pay for are not worthless to us. We simply think we ought not to pay for them. Love is not worthless. We would make all kinds of sacrifices for it. Yet a market in love -- or in anything we consider "sacred" -- is totally inappropriate. These things have a dignity rather than a price. -- Mark Sagoff in The Economy of the Earth.

And there is a confusion between stocks of real wealth that increase human welfare (houses, cars, forests, topsoil, factories, roads) and flows of production and discard of that wealth. It should be obvious that a society with a given level of per capita wealth would be better off economically if it maintained its

8 wealth with a low rate of production and discard, rather than a high rate -- not to mention how much less it would drain its resources and pollute its environment. But modern nations actually take pride in and aim for greater flows of wealth (production and consumption), rather than stocks, thereby ensuring enormous and unnecessary waste.

If economy means 'management of a household,' then we have a system of national accounting that bears no resemblance to the national economy whatsoever, for it is not the record of our life at home but the fever chart of our consumption. -- Wendell Berry in Home Economics

In systems terms an economic system is a system of information (prices, incentives, rewards, penalties). Economic information is taken into account by decision-makers (perhaps along with other kinds of information, perhaps not). It influences decisions and actions that affect the real, physical world as well as the world of economic information. If economic information is faulty, biased, delayed, or if it fails to deliver information about important things (such as the condition of the environment), the society is unmanageable. It will never be able to meet its goals, because it is acting on wrong information. You cannot solve a problem you have no information about. You cannot correct something when you under- or over-estimate the amount of correction necessary. You cannot act in time, if information comes to you only after the effective time for action is over.

The first task in designing an economic system for a sustainable society, then, is to improve the accuracy and completeness of economic signals and to get them to decision- makers in time. Fortunately many people in all parts of the world are now thinking through how to do that. Much of our next Annual Meeting will be devoted to their efforts.

There is a second, larger, and even more important task. That is to realize that economic systems, or any other systems designed by human beings, arise from deeply shared social values and assumptions about how the world works -- what we in the Balaton Group often call paradigms. A more complete resource accounting system or more effective pricing system grafted onto a society that does not understand or value the earth's resources, or that does not care about the long term, will not lead to a sustainable society, no matter how good it is. Only a different way of thinking, socially shared, expressed and reinforced daily in public discourse can do that. The necessary way of thinking is different, not new, and not foreign to anyone. In fact it is ages old, and it lies within each of us. But in our present society it is not acceptable to speak of it or act upon it.

9 It is true enough that humans can add value to natural things: We may transform trees into boards, and transform boards into chairs, adding value at each transformation. In a good human economy, these transformations would be made by good work, which would be properly valued and the workers properly rewarded. But a good human economy would recognize at the same time that it was dealing all along with materials and power that it did not make. It did not make trees, and it did not make the intelligence and talents of the human workers.... We are going to have to see that, if we want our forests to last, then we must make wood products that last, for our forests are more threatened by shoddy workmanship than by clear-cutting or by fire.... The good worker loves the board before it becomes a table, loves the tree before it yields the board, loves the forest before it gives up the tree. The good worker understands that a badly made artifact is both an insult to its user and a danger to its source.... Because our age is so manifestly unconcerned for the life of the spirit, many people conclude that it places an undue value on material things. But that cannot be so, for people who valued material things would take care of them and would care for the sources of them.... The so-called materialism of our own time is, by contrast, at once indifferent to spiritual concerns and insatiably destructive of the material world. I would call our economy not materialistic, but abstract, intent upon the subversion of both spirit and matter by abstractions of value and of power. -- Wendell Berry in Home Economics

Words like "love," "spiritual," "properly,", and even "good worker" are quality words, not quantity words. They are suspect in our quantity-driven society. Yet we know they are crucial; our present economics is driving out quality as fast as it piles up quantity, and we all feel the lack. Quality concerns need not totally replace quantity concerns, but they need to take their proper place, orienting the whole economic effort toward goals that are truly worthy. Economist Herman Daly in his book Toward a Steady State Economy (Freeman, San Francisco, 1973) has given as complete a definition as I have ever seen of what that proper place is. His little picture of a truly integrated whole economic system has been central to my own thinking ever since I first saw it 17 years ago. I can think of no better way to launch the Balaton Group's exploration of an economics for a sustainable society than to quote it in its entirety.

"The ultimate end is that with reference to which intermediate ends are directed. It is that which is good in itself and does not derive its goodness from any instrumental relation to any other end. Our perception of the ultimate is always cloudy, but necessary nonetheless, for without a perception

10 of the ultimate it would be impossible to order intermediate ends and to speak of priorities.

"The intermediate ends are instrumental in designating, to varying degrees, the conditions necessary for approaching the ultimate. Examples of intermediate ends are wealth, income, health, knowledge, leisure, etc. Ethics relates the ultimate end and intermediate ends and ranks the intermediate ends according to their ability to contribute to the ultimate.

"The intermediate means are necessary for the attainment of one or more of the intermediate ends. Examples of intermediate means are capital equipment of all kinds, labor, conventional natural resources, and the natural services provided by the ecosystem. Value is (or in the case of natural services, should be) imputed to intermediate means according to how well they serve the hierarchy of intermediate ends at the margin determined by scarcity. Political economy is the the problem of organizing and valuing intermediate means in the way that best serves the hierarchy of intermediate ends (also, thus, the ultimate end if the intermediate ends are properly ranked).

"The ultimate means are the fundamental useful stuff of the universe, i.e. low entropy matter-energy. Low entropy is a necessary but not sufficient condition for value. The nature of the ultimate means is studied by physics. The conversion of ultimate means into intermediate means is technology in the broadest sense. In this we include the natural technology of the ecosystem that provides the services of regeneration of renewable and life-cycle resources, the absorption of waste products, and so forth -- indeed the entire maintenance of our basic life support system. We also include human technology, which seeks to appropriate ultimate means effectively and to convert them into intermediate means -- particularly into those intermediate means of highest imputed value.

"The overall problem is how to use ultimate means to serve best the ultimate end. We might call this ultimate political economy, or stewardship. To state the problem in this way is to emphasize at once both its wholeness and the necessity of breaking it into more manageable subproblems, for the overall problem must be tackled one step at a time. Yet one step is valueless without the others, and one correct step is worse than valueless if the steps it takes for granted were false steps. If our concept of the ultimate is evil rather than good, than an inverted ethics is better for us than a consistent ethics. If our ethical priorities are upside down, then an inverted or incorrect imputation of value to intermediate means is better than a correct imputation. If our intermediate means are incorrectly valued, than a technology that efficiently and powerfully converts ultimate means into the most valuable intermediate means is worse than a weak technology. And

11 an erroneous physics that will cause technology to stumble rather than advance an evil end efficiently is better than a correct physics.

"The parts of the total economic problem are not only related from the top down, but also from the bottom up. Our customary ethical ordering of intermediate ends conditions our perception of the ultimate. We tend to take our conventional priorities as given and then deduce the nature of the ultimate as that which legitimates the conventional priorities. We tend also to order our intermediate ends in such a way that we can effectively serve them with the existing valuation of intermediate means. Further, there is a tendency to value the intermediate means according to the technical and physical possibilities for producing them. If it is possible, we must do it.

"The point is that the parts of the problem are highly interrelated and cannot be dealt with in isolation.... The total problem of relating the five subproblems -- theology, ethics, political economy, technology, physics -- is more delicate than any of the subproblems themselves, but not for that reason any less imperative. Surely everyone must have a vision of the total problem, otherwise he does not understand what his specialty is for. Clearly each stage can be dealt with only in a partial and incomplete manner. But [my] premise is that it is better to deal incompletely with the whole than to deal wholly with the incomplete."

Rough Notes on a New Economics -- by John Peet

The Current Situation At present there are, broadly speaking, two dominant sets of economic theories of resource utilization -- the Capitalist and the Socialist. Both are utilitarian (that is, they consider humans to be the center of the universe) and both are driven by political ideologies. Both also claim erroneously to be scientifically based. We need critiques of both of them.

A good comment on the Western, capitalist approach is given by the following quotation from Marilyn Waring (from Counting for Nothing: What Men Value and What Women are Worth, 1988, published in the USA by Allen & Unwin and in the UK by Unwin Hyman Ltd): "I turn ... to the mountains. If minerals were found there, the hills would still be worthless until a mining operation commenced. And then as cliffs were gouged, as roads were cut, and smoke rose, the hills would be of value -- their value would be the price the minerals would fetch ont he world market. No price would be put on the violation of the earth, or the loss of beauty, or the

12 depletion of mineral resources. That is what value means, according to economic theory."

I am sure there are comparable Socialist theories, with similar outcomes.

Politicians generally listen to advice from economists, because they believe that advice to be objective and unbiased! When one talks with politicians, one rapidly learns why destruction of resources is proceeding rapidly the world over -- it provides the wealth that will enable us to pay for pollution controls so we can carry on living and growing in the same old way.

The "logic" is inexorable. Waring goes on: "With minor structural changes, the UN System of National Accounts (UNSNA) has remained conceptually intact since 1953. When international reports ... refer to women as statistically ... invisible, it is the UNSNA that has made it so. When you are seeking out the most vicious tools of colonization, those that can obliterate a culture and a nation, a tribe or a people's value system, then rank the UNSNA among those tools. When you yearn for a breath of nature's fresh air or a glass of radioactive-free water, remember that the UNSNA says that both are worthless."

She also quotes an economist, who expresses the opinion that: "For me, the system of national accounts demonstrates in the economic discipline the gap between villainy and incompetence."

Strong stuff! But no stronger than Schumacher's opinion (from Small is Beautiful). "To press non-economic values into the framework of the economic calculus economists use the method of cost benefit analysis. This is generally thought to be an enlightened and progressive development, as it is at least an attempt to take account of costs and benefits which might otherwise be disregarded altogether. In fact, however, it is a procedure by which the higher is reduced to the level of the lower and the priceless is given a price. It can therefore never serve to clarify the situation and lead to an enlightened decision. All it can do is lead to self deception or to the deception of others; for to undertake to measure the immeasurable is absurd.... The logical absurdity, however, is not the greatest fault of the undertaking: what is worse and destructive of civilization is the pretense that everything has a price, or, in other words, that money is the highest of all values."

Possible Approaches to a Future Ecological Economics (a better term might be "Ecolonomics" as suggested by Hans Opschoor)

13 As I see it there are two main strands of thinking in the Capitalist countries about ways of taking environmental values into account. (These are the only ones with which I am familiar - - they presumably have close analogues in Socialist economic theory.) 1. Resources are valued using "market" methods. For example, forests may be valued at the opportunity cost of their timber or pulpwood. This method (followed by WRI's Robert Repetto) involves taking account of resource stock changes via a balance sheet and using them to correct the conventional National Income accounts. A relatively straightforward extension of market valuation involves using "nonmarket" methods. A forest, for example, is "valued" by adding up what people would pay at the gate to go in; what it costs them in equipment, transport, hotel accommodation etc. to get there; what they will pay for a license to kill an animal, fish, or bird in it; and maybe also what they can be blackmailed by the power structure into paying as environmental "protection money." This method is the same in general paradigm as the first.

2. Physics-based approaches. I use the term "physics-based" in the most general sense, to include ecological, thermophysical and system dynamics perceptions. The use of perceptions in this area involves more a way of thinking than the use of specific policy- oriented tools that give superficially quantitative "answers." Examples of this approach involve the Norwegian system of exhaustive resource accounts, and that of "numeraire accounting" or resource accounting (as Malcolm Slesser terms it). Energy units may be the most appropriate numeraire, but, as with money, one runs the risk of excessive reductionism. Malcolm and Jane have done a lot of philosophical work on this issue, as I have, and its potential is, I believe, a lot richer than most of its critics acknowledge. but its prime purpose is to help illuminate the constraints, not to clarify details.

The first (conventional economic) approach is broadly comparable with present methods of economic valuation and does not involved any significant paradigm shift. For that reason I have personal doubts as to whether it has the potential to do much to help us toward sustainability. If used in a broader context, i.e. constructed to reflect system-wide ecological constraints, then it could be extremely valuable. Economics would then be the servant, at last, not the master!

The second approach is not at all comparable with conventional thinking, and for that reason is usually dismissed by those with the power to specify the tools that are "permissable" for policy generation. This is unfortunate, because it could help clarify some of the questions the conventional methods do not address.

14 In my opinion, societies need to use as many valid tools as are available, and that is the core of what I think the meeting should address.

I don't believe the two broad sets of tools are capable of being combined into one "super-tool;" a form of "ecological cost- benefit analysis." The idea that one can address complex systems ecological issues by using single -- or simple -- policy criteria surely belongs in the Dark Ages! The dollar and the joule cannot be combined into a single measure or criterion without making heroic (or dictatorial) assumptions about social valuations. It is all too easy for the beauty of a rose to be reduced to botany, or a glorious sunset to meteorology! Science -- whether good or bad -- is not enough.

Both the political ideologies of Capitalism and Socialism have (as is well explained in the book by Niels Meyer et al. Revolt from the Center) at their cores the idea that continuous growth is not only possible but necessary, and that human ingenuity will always find a way. These assumptions have long since ceased to be scientifically supportable, so I believe one important way forward is to use physics-based tools to delineate the constraints, and ideological-economic tools, democratically agreed upon, for the social organization that goes on within them.

Other Important Approaches -- With People's Wisdom It is essential that our discussion should not be limited to the two dominant paradigms of Capitalism and Socialism. Our own experience in Aotearoa-New Zealand makes it clear that the wisdom of the indigenous people can illuminate perceptions that we from the so-called "developed" world have all but lost sight of.

The "principle of the gift," for example, is central to the North American Indian culture as well as that of Pacific Islanders. That principle involves treating the environment and its resources as a gift from the past, which must be cared for and passed on as a gift to the future. It could not be much more different from the individualistic, present-centered view of the powerful and rich nations.

People are not just robotic Homo economicus. They are living, thinking, loving, spiritual beings who live in communities and work in groups and have children and grandchildren. Their deeper wisdom is not capable of being measured by economics or by opinion polls or referenda -- but one can know that wisdom, if one is willing to listen.

We should not seek methods that can be applied mechanically, but search for means whereby the innate wisdom of people can be brought to bear, alongside that of resource experts providing the most up-to-date integration and interpretation of scientific and

15 economic factors. I see Dennis's games, for example, as making a substantial contribution in this area.

In such a participatory, democratic process of adult learning, a shared understanding is developed that will enable policy options to be created and evaluated. The decisions will then be up to the community at large to make.

Announcements

Upcoming Conferences on Gaming and System Dynamics Dennis -- put in notices of ISAGA & NASAGA & S.D. Society meetings in Boston

You Too Can Be in the Los Angeles Times The paper given by Niels Meyer at the Balaton Group Low- Electricity Europe presentation in Budapest last fall was so succinct and full of information that Dana Meadows asked him for permission to submit it to the Los Angeles Times. He gave that permission, and after a little editing by Dana to make the length appropriate, the Times printed it -- a copy is included at the end of this Bulletin. Niels has kindly donated the fee for this publication ($250) to the Balaton Group.

Meanwhile Joe Alcamo wrote a short opinion piece about a German Marshall Plan for Eastern Europe, which Dana also forwarded to the Times -- it is being considered for publication now. Genady Golubev will be the author of the next submission, adapted from his presentation to the last Balaton meeting on the international politics of the greenhouse effect.

This outburst of literary effort may turn out to be an excellent way for members of the Balaton Group to communicate their wide array of knowledge and wisdom, to promote public understanding of issues of sustainable development, and to make a little money for the Group. Each edition of the L.A. Times reaches over 1 million American readers, and its editorials are also syndicated to over 700 other papers, not only in the U.S. but all over the English-speaking world (including the International Herald Tribune, for example.)

If you have something you would like to say to such a huge audience, write it up and send it to Dana. The best length is 1500 words, but she will adjust the length, and the style of English, if necessary. These articles go on the opinion page, so they should contain more than a straight report -- they should say something practical about what to do and who should do it. The more illustrative examples, striking facts, and easily picturable details the better. Speak as who you are, from where you are -- Americans hear far too little from Asians, Africans, Latin

16 Americans, and even Europeans, and Americans are especially eager these days to hear from people of the USSR and Eastern Europe.

There is no guarantee that the Times will take your article - - each one will have to stand on its own merits. But the editors there are dedicated to the same purposes we are, and they provide us a wonderful opportunity to further that purpose.

So write something, something simple, something you know well, something the world should hear. We can't expect the world to act upon information it doesn't have. We can't expect to change paradigms without expressing new paradigms.

Sabbaticals in New Hampshire Dennis -- your announcement here

News from the Members

Wilfrid Bach's report to the Dutch government Energy Policy in the Greenhouse (which he was busily proofreading at the last Balaton meeting) has now been published. The report is unique because it does not (like nearly all other reports) extrapolate out a global warming "fate." Instead it recognizes that the greenhouse effect is a matter of human choice and it sets out a target. The target is that the average rate of warming should not exceed 0.1 degrees C. per decade and should not exceed 2.5 degrees (relative to 1850) altogether. The report then sets up a carbon budget for the world economy. The great importance of this work is that it shows, in quantitative detail, that only a small amount of climate change is inevitable. The greenhouse effect is a problem that can be solve, if human beings choose to see it that way. (Energy Policy in the Greenhouse, by Florentin Krause, Wilfrid Bach, and Joan Koomey, International Project for Sustainable Energy Paths, El Cerrito CA 94530, September 1989, published in conjunction with the European Environmental Bureau, funded by the Dutch Ministry of Housing, Physical Planning and Environment.) Wilfrid has taken the Ten Commandments of Global Warming originally put forward by Bert De Vries at the meeting, modified them slightly -- "for my own purposes" -- and printed them up for distribution. This is how he phrases them: 1. Don't despair -- act. 2. Don't adapt -- prevent. 3. And yet -- keep cool. 4. Think twice -- use a bike. 5. Love nature -- you need her. 6. Plant trees -- not confusion. 7. Whether you're rich or poor -- do more with less. 8. Don't fool yourself -- you have to change too.

17 9. Just in case -- learn to swim. 10. Help save the planet.

Hartmut Bossel has just finished a manuscript for another book (in German) on environmental science, with his talented son Kenny doing the illustrations. Taking a well-deserved break he writes the following: It was a big disappointment for me that I could not make it to the Balaton meeting this year. I had come home from Malaysia on Saturday, had worked hard to clear my desk on Sunday and Monday, and Monday evening when I packed the dar to drive to Csopak, the after-effects of Lariam (a new malaria drug) struck and forced me into bed for four days. Only two months later do I feel reasonably free from the symptoms. (The trouble is that in the regions where we work -- South and Malaysia -- mosquitoes have built up resistance to other malaria drugs.) Our five-week course in Kuala Lumpur for some 25 (mostly) forest service scientists and managers from Malaysia, Thailand, Indonesia, and the Philippines was quite successful. We spent about four weeks at the ASEAN Institute of Forest Management teaching ecological systems analysis, modeling and simulation, and developing models in working groups. We took a break after two weeks for a week in the tropical forest, to study logging and forest industry problems first-hand. The outcome of the modeling exercises were two small models on Malaysia's population and on touristic development, and two fairly complex models, one on tropical mixed forest dynamics after selective logging, and one on the forest products industry. My next project will be to write up the Kuala Lumpur course in the form of a textbook for ecological systems analysis. Our work on the tropical forest model attracted some attention at the Forest Research Institute of Malaysia, and so we have been invited to continue the work with them next February and March. My doctoral student Holger Krieger will be there for six weeks, and I will come for three. I am confident that we can produce a model that will be quite helpful to the forest service for assessing alternative logging strategies and their long-term impacts. In the meantime we are continuing our work in China, after considerable hesitation and soul-searching. Heiner Schafer and Holger Krieger were in South China in November and December to construct a dynamic simulation model of eucalyptus plantations, based on a model for acacia that we did in China two year ago. (It has also worked very well with other species in other regions, even spruce in Europe.) I plan to combine the Malaysia trip in March with visits to Chirapol Sintunawa in Bangkok and Aromor Revi and his group in New Delhi. Our winter semester has begun, and I have to try to handle some 300 students in my four courses. I would prefer to

18 concentrate on research and projects, but these courses also force me to get my material organized, and that may not be so bad.

Nic Briones reports the launching of a four-year project linking his Institute of Environmental Science and Management in Los Banos with Dalhousie University in Halifax, Nova Scotia. The purpose of the project is to promote sustainable development of Philippine natural resources by strengthening the institutional capacities of Philippine universities to provide training and policy advice on environmental and resource management. Nic writes: "The Philippines has just again undergone a major turmoil. The just-failed coup d'etat shattered the small benefits that were slowly and painfully gained since the last coup in 1987. During the height of the rebellion it hurt us a lot to see Filipino brothers shoot each other and the death of by-standers caught in the crossfire." "The major task that lies ahead is to rebuild the economy that was enjoying a healthy growth prior to the event. The total loss is still being assessed in terms of economic loss that will certainly run to hundreds of millions of dollars and the loss of lives of soldiers and civilians. But the resiliency of the Filipinos will carry us over the worst of these circumstances." "Please pray for us that we may have a peaceful New Year."

Joan Davis is helping to set up new departments of environment at the Universities of Zurich and Bern, and is in the planning group for one at the University of Basel. She recently spent several weeks in India, from which she summarizes her impressions -- "no waste, friendly smiles." In an extraordinary gesture of welcome to the Balaton Group Steering Committee, she prepared her new house for our meeting by installing a new water heater, shower, bathroom, and washing machine, and she stayed up all night before the meeting to insulate her attic bedroom so everyone would stay warm. Recently Joan appeared on an hour-long Swiss television show about the greenhouse effect, along with Bob Jungk, former President of Switzerland (who has, says Joan, worked out all the ways to counteract carbon dioxide emissions without citizens having to be involved -- such as nuclear power.) It must have been a lively debate!

Bert DeVries will be leaving the University of Groningen in March to work with a group under Leen Hordyck (formerly leader of IIASA's Acid Rain Group ) at the Dutch State Research Center for Health and the Environment. He will join a group with the responsibility to deliver a state of the environment report for the Netherlands every two years (an excellent opportunity to establish new environmental indicators!). His new address after April will be: RIVM P.O. Box 1

19 Bilthoven The Netherlands telephone: 030-749-111

Bert has found funding from the Dutch government to host a February meeting of Balaton Group members and others interested in designing a climate change game. The group will meet under the auspices of the Working Group on Response Strategies of the Intergovernmental Panel on Climate Change. Bert's electricity planning game Future Voltage is now being used by Dutch utilities. Funding has been approved to include the game as part of a permanent exhibition in Arnem. It is also now being adapted for Dutch high schools, along with the Balaton Group's fish game.

Samir Ghabbour writes from Cairo: Thank you for all you have done for us at Csopak. It was quite a new experience to interact on some of the problems that confront our species and our environment. The memory of the meeting will continue to influence my thinking and my activities for a long time to come. Genady Golubev is in Cairo for a conference on climatic fluctuations. There have been several environmental conferences in Cairo lately: the biggest is in December on Global Warming, mainly for politicians. I have put one of my students on a Ph.D. thesis on Indicators of Sustainable Agriculture in Africa, with a main emphasis on Egypt and comparisons from other African countries for confirmation or validation. He is still digesting the enormous literature.

Janos Hrabovzsky writes: The Balaton Group meeting was not only interesting and useful, but also great fun. Since then I have been back to Hungary for a short visit to explore how somebody like myself could help from the outside with the re- building of the economy. It looks like I will be able to do some part-time teaching in the fields I am familiar with at the Karl Marx University, the University of Agriculture in Godollo, and in the newly established US-Hungarian Cooperative Center for Management Training. At the University for Agriculture a young professor has asked me for help in getting hold of computer based games that could be used in teaching business decisions. I would be pleased to hear from BG members about sources for such games.

Diana Liverman has gotten married (though not changed her name) and has moved to a new university. Her new vital information is: Diana Liverman Penn State University Department of Geography

20 302 Walker Building University Park PA 16802 tel (W) 814-863-7004 tel (H) 814-231-8815 FAX 814-865-3191 bitnet DML4@PSUVM omnet D.Liverman

Amory Lovins has been named one of the "rising stars, the leaders of tomorrow" by -- get this -- the Wall Street Journal. The editors of the Journal say, "The guru of electricity conservation, Mr. Lovins once was scored by utilities but now is being courted as the 1990s loom as a decade of power shortages. His main point: The best electricity-saving technologies now available could save three-fourths of all electricity consumed by the United States.... Mr. Lovins developed the concept of "negawatts" as a measure of the amount of electricity that can be saved through conservation. He has convinced a number of utilities that negawatts are cheaper than megawatts, meaning that it's less expensive to pay for customers' efficiency improvements than it is to build new plants. With the U.S. using twice as much electricity to manufacture goods as Japan, Mr. Lovins could be a key figure as America struggles to remain globally competitive."

Dennis Meadows -- tell about R-5 northern forest project, affordable housing project, social data center, anything else

Dana Meadows is spending six months slowing down her life in order to learn the lessons one learns by fighting cancer. The treatments are a bit rough, but she is still able to work on her newspaper column and textbook. The main slowdown is in her travel schedule, which is probably a good thing. She and her doctors promise that she will be recovered before the spring gardening season begins, and in top condition by the next Balaton meeting. The ten-part television series Dana (and many other Balaton Group members) has been helping with will be broadcast over public television in the United States starting October 1990. It is titled (unfortunately) "Race to Save the Planet." The shows will be available either for broadcast in foreign countries, or as part of a learning package for universities shortly thereafter. Dana's textbook to accompany the shows will be published sometime in 1991 (assuming her health permits continued progress -- at this point the book is just over half done).

By the time you receive this Bulletin, Niels Meyer will probably have welcomed grandchildren #3 and #4 to the world. Niels traveled in September to Kiev with 3000 young people from Scandinavia to hold conferences with Russian Green organizations about nuclear power and energy conservation. He was very impressed to tour the abandoned city that once housed 40,000 people near Chernobyl. He is working with a Danish-USSR exchange

21 to set up demonstration sites for wind energy, bio-energy and other renewable energy technologies. Niels also recently spent two days in West Berlin discussing city ecology with the City Council. The Danish textbook Energy and Resources by Niels Meyer and Jorgen Norgard is a best-seller.

Jorgen Norgard and Bente Christensen have published an article "Shrinking Danish Agriculture" in Agriculture and Human Values, Winter-Spring 1989 (an interesting issue, with many articles on "The Crisis in European Agriculture"). Their paper was first presented to the 1987 Balaton Group meeting. It discusses the environmental problems created by Denmark's increasing push to higher agricultural outputs using enormously high levels of fertilizer and pesticide inputs, the realization that the environmental costs were much higher than the agricultural benefits, and the beginning of government policy to regulate the use of chemicals and to turn some land back to nature.

John Peet writes from Aotearoa/New Zealand: First, many thanks for all the hard work you put in, jointly and severally, for the Balaton meeting. The organization and the hospitality were impeccable. I found the experience to be immensely warm and stimulating. I have never been part of a group of people who are so committed to sustainability, and yet so completely knoweldgeable and professional about it. Truly a memorable occasion! Things are getting into gear here, as far as Ministry for the Environment interest in climate change is concerned. A significant part of this is, I think, that we in the Sustainable Energy Group have got most of the environmental NGOs on our side. I can't claim that my time at Balaton was the sole reason, but it certainly helped strengthen my part in it considerably. For example, I have lost count of the number of copies of Wilfrid Bach's paper I have copied for people! I recently had an interview with our Prime Minister, Geoffrey Palmer, who is also Minister for the Environment. He has asked us to respond to a policy paper on climate change produced by his Ministry. (It's a wimpish document, and we're responding strongly!) Four of us have also been asked to meet with Ministry staff working on responses to climte change, and we are hoping for a meaningful working relationship. Amory Lovins called in briefly last week. He spent a day each in Auckland and Wellington, addressing public meetings organised by us. I think we now have a good background in the latest technical options for energy efficiency, which is the key issue in policy development in this area, and where we are rather behind in this country.

Writes Anupam Saraph from Pune:

22 I am now the head of the Education and Training Division of "Computer Point" and the CEO of a software house that the parent company, Anandel Business Machines Pvt. Ltd. is setting up. Yes, beginning this month, I have left SRI. This transition is an internship into the business world to experience and live through short cycles. I hope it will help me understand and appreciate better national and global systems. In fact I already find myself thinking and using more models than before. I see this stage as only a temporary internship. I am looking for long term opportunities to study and contribute to building sustainable and resilient systems. I feel a little left out as I have not received a Bulletin and heard only a little about Balaton '89 from Aromar (Revi) and Joan (Davis). I am getting sceptical about mail getting to here. Not being at Balaton this year I missed your newspaper clippings, the patient counseling exchanges with friends, Dennis's "anything you wish," the high quality of life, and of course the hugs!

Chirapol Sintunawa recently gave a lecture from the 27th floor roof of a major Bangkok bank, pointing out to the bank staff the various sources of air pollution and greenhouse gases in the city. He had originally asked permission to go up there to give the lecture to his graduate students. The bank staff asked him to repeat it for them. Chirapol has been asked to write two articles for Thai magazines on the greenhouse effect and its likely impact on Thailand. He and his students and staff have now completed their survey of 7000 Thai farms (plus 1300 tractor tests and 600 tests of other farm machines). The data are being processed, and the final report on energy use in Thai agriculture will be ready by June. Chirapol is thinking that his next project might be a study of the effect of Thai agriculture -- especially methane production -- on the greenhouse effect.

Malcolm Slesser is a visiting professor for four months at IVEM at the University of Groningen, working with Bert DeVries to apply his ECCO energy/economic model to both the Netherlands and the entire EEC.

Stories, Quotes, Jokes

Egypt Prepares for Greenhouse Floods (Excerpted from Development Forum, November/December 1989)

Egypt is about to redraw its development plans in preparation for the possible loss of a fifth of its fertile farmlands vulnerable to rising sea levels unleashed by global warming.

23 A national crisis conference here has brought together representatives of federal and local authorities, research institutions and other specialist agencies to assemble a collective response to what is expected to be one of the worst catastrophes caused by the "greenhouse effect."

Similar meetings will soon be held throughout the Middle East, following the publication by the United Nations Environment Programme (UNEP) of the first comprehensive projection of the likely impact of the change on the entire Mediterranean region.

Comprehensive assessments are also being prepared for the Caribbean, South Pacific, South Asian and the South-East Pacific regions to assist their governments in planning essential coastal defenses.

The projected global warming ... may well create perhaps 300 million "eco-refugees" during the next century.

The study on the Nile delta compiled jointly by UNEP and the U.S. Environmental Protection Agency projects a 100-centimeter sea level rise within half a century, affecting 15 million people living within 30 kilometers of the Mediterranean coast, disrupting the agricultural productivity of 12-15 percent of arable land and causing a 15 percent loss in the gross national product. Other analyses have produced even gloomier projections.

Egypt's response is an experiment in land-use planning in the face of disaster. Containing and coping with the rising seas will require two broad strategies. The first is the global reduction of "greenhouse" gas emissions.... The second is research that will identify the regions likely to be hardest hit by the rising waters and help in local planning of coastal defenses.

Future coastal development in the Nile delta must be directed to locations that can be most economically defended from the rising sea levels. There was a sense of optimism at the crisis conference despite the projections, because, in a country like Egypt where the state exercises full control on land use and territorial planning, an integrated long-term strategy ... may just be possible.

As a first step the meeting recommended more comprehensive studies on land-use patterns, coastal erosion, land reclamation and wetlands, and an appraisal of the long-term development plans of the area. Problems related to freshwater and nutrient discharge and land subsidence will be closely monitored.

The scientific institutions represented at the crisis conference are to develop a broad-based, multidisciplinary program to evolve a master plan for the threatened region. Such a long-

24 term strategy for the overpopulated, shrinking Nile delta may well prove to be a planner's nightmare. But it may also set a global pattern for creating the conditions essential for orderly development that meets the demands of the next century.

Some Views on Wilderness

At the same time that we are earnest to explore and learn all things, we require that all things be mysterious and unexplorable, that land and sea be infinitely wild, unsurveyed, and unfathomed by us because unfathomable.... We need to witness our own limits transgressed, and some life pasturing freely where we never wander. -- Henry David Thoreau

I am for preservation. I say we should preserve the redwoods, sure, maybe 100 acres of them, just like the way God intended them, to show the kids. Those environmentalists who talk about preserving the wilderness in Alaska -- how many goddamned bloody people will end up going there in the next 100 years to suck their thumbs and write poetry? -- Justin Dart, an advisor to President Ronald Reagan

Surely such a rich and fertile land cannot be permitted to remain idle, to lie as a tenantless wilderness, while there are such teeming swarms of human beings in the overcrowded, overpopulated countries of the Old World. -- President Theodore Roosevelt

Empty: unoccupied or uninhabited; unfrequented.... Empty is one of those words that reveals unspoken attitudes. Lacking people, it means. No humans equals nothing. Hence useless, senseless, valueless, hollow, foolish, without effect or force. The word "empty" inherently expresses contempt for everything that is not human. The old puzzle about the tree falling in an unoccupied forest would not be a puzzle at all in a world where trees and porcupines, say, were assumed to have some justification independent of humanity. -- Paul Gruchow

Wilderness is the raw material out of which man has hammered the artifact called civilization. -- Aldo Leopold

The swan song sounded by the wilderness grows ever fainter, ever more constricted, until only sharp ears can catch it at all. It fades to a nearly inaudible level, and yet there never is going to be any one time when we can say right now it is gone. -- Edward Hoagland

25 We have never known what we were doing, because we have never known what we were undoing. We cannot know what we are doing until we know what nature would be doing if we were doing nothing. -- Wendell Berry

A Limerick for the Ozone Layer (Written by Flemming Boldvig of Denmark, submitted by Niels Meyer)

There is a big hole in Ozonia From too much CFC and Halonia! Let us fix our leaks. Let's improve the techniques and expand global use of ammonia.

The Market Can Save the Elephant (excerpted from the Christchurch NZ Press, 2 December 1989, submitted by John Peet with the comment, "more interesting garbage from the New/Old Right!")

The African elephant ivory trade best explains the free market conservation philosophy of a visiting American specialist Mr. Fred Smith. Mr. Smith is the president of the Competitive Enterprise Institute, a group committed to advancing the principles of free enterprise and limited government, which provides advice to business and the White House. Mr. Smith told a meeting of an international economic group that the elephant protection issue was a useful example of two competing environmental beliefs. "The main one is that the elephant is too fragile to withstand market forces, so it should be separated from the world economy. The belief is that by banning the trade in ivory the demand for it, and the shooting of the elephants will diminish," he said. "The second belief is that the elephant, rather than being too much part of the marketplace, is not integrated enough into it. If someone owned the elephants, if the Africans could farm them and earn the resources they needed to head off the poachers, then the elephants would survive." Mr. Smith said the individual's ability to guard a resource was more effective than a collective system's ability. He said that no international collective body had done an effective job in protecting any resource. e correct step is worse than valueless if the steps it takes for granted were false steps.

26